Op-Ed: US food aid is corporate welfare

The US food aid programme is corporate welfare for giant agribusinesses, according to a detailed analysis of the data by the Guardian.

Three US corporations dominate the $1 billion US food aid programme. A study of the data by the Guardian shows the major beneficiaries of the food aid programme are ADM, Cargill and Bunge. The study is based on an analysis of the food aid contracts awarded by the US Department of Agriculture (USDA).

ADM, enjoying tax haven status in Delaware, received the lion's share of the contracts in 2010/11, with nearly half of the volume. It was paid almost $300 million by the US government. Cargill, the world's largest privately owned company, had 16 percent of the volume and was paid $96 million. Bunge, which is located in the tax haven of Bermuda, was paid $75 million for food aid. Between them, these three multinational corporations accounted for two thirds of US food aid.

The Guardian's analysis of US food aid policy will come as no surprise to many experts in the field, who have long criticised the system as supporting agribusinesses at the expense of the poor in the developing world and even America's own farmers.

Wikipedia

A study by Cornell University economists earlier this year found the US system of aid to be dysfunctional and recommended local sourcing of food, rather than the present practice of exporting US agricultural surpluses.

The US food system has also been strongly criticised by charities such as Oxfam. In a report the charity claimed that if US food aid were not "tied" (ie, to US businesses), an additional 17 million hungry people could have been fed for the same cost in 2010. The charity was highly critical of the fact that a substantial amount of the purported aid was in fact going to the profit margins of agribusinesses. In fact, only approximately 40 percent of every US taxpayer dollar is even spent on food. The rest goes on shipping, administration and profits.

Eric Munoz, agriculture policy analyst for Oxfam America, said:

This new information makes it abundantly clear that it is massive multinational firms – not rural America and not farmers – that are the direct beneficiaries of the rigged rules governing the US food aid programme.

The US system of tying its food aid to US businesses is not only inefficient in meeting its stated policy aim of feeding the world's poor, it is increasingly out of line with the practices of other developed countries. The European Union and Canada, for instance, have both 'untied" their food aid policies, shifting to cash donations. However, the prospects for reform of the outdated and inefficient US food aid system seem limited at present. According to the Guardian, a USDA spokesperson defended the current system, saying, it benefited 33 million people worldwide between 2009 and 2012 while supporting jobs in the US.

This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com